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India Inc. may see better 'planning' in future - Views on News from Equitymaster
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  • Dec 24, 2009

    India Inc. may see better 'planning' in future

    Make an assessment of the material, capital and human resources of the country. Formulate a Plan for the most effective and balanced utilisation of country's resources. These are some of the key result areas (KRAs, as they are called in corporate terms) for India's Planning Commission. One must acknowledge that the Commission has done a very impressive job of its basic duty - planning - 0ver the past half century. For the first eight Plans, the emphasis was on a growing public sector with massive investments in basic and heavy industries. But since the launch of the Ninth Plan in 1997, the emphasis on the public sector has become less pronounced. The focus shifted to building the economy as a whole.

    The Commission has been entrusted with managing the economy's resources. However, the planning for the same seems to have gone pretty off target year after year. From the first to the eight plan period, the commission's deficit financing plan was rarely close to the actual outlay. Similar has been the story with regard to infrastructure outlay during the Tenth and Eleventh Plan periods.

    Source: Planning Commission of India

    However, the Planning Commission is now looking to reinvent itself. It plans to expand its role from only drawing five-year growth plans for the country and determining fund allocation for each sector. Going forward, the Commission, which was set up in 1950 would look into more areas. These would not just include assisting the government in resource and outlay planning. But more importantly, it would aid India Inc. by participating in major policy decisions.

    One of the major bottlenecks for Indian companies as well as MNCs hoping to expand their manufacturing base in the country has been land acquisition laws. The Planning Commission is considering ways of revamping the same. Most of these laws came into being during the British Raj. The Commission believes that the government should not intervene with land acquisition anymore. Instead, private companies should be asked to buy land on their own.

    However, there are instances of resistance from few people holding up land acquisitions by private companies. The Singur debacle and exit of Arcelor Mittal from Orissa being prime examples. To resolve such situations, the Commission would seek a law under which it would be compulsory for all people to sell their land if a company manages to acquire say 90% of the project area. An encouraging start indeed!

    The Planning Commission has also reworked certain modalities of the roadways bidding process. This is after the government failed to encourage private sector firms to undertake the government's road building programme. It is now on its way to bid out 8,000 kms of roadways as compared to the 2,000 kms that were bid out in the last three years.

    While the start is certainly encouraging, the Planning Commission's continued focus on not just planning but also execution will be hugely benign for the economy and India Inc.



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